MEMPHIS, Tenn. — AutoZone has reported net sales of $1.5 billion for its second quarter (12 weeks) ended Feb. 13, an increase of 4 percent from the second quarter of fiscal 2009 (12 weeks). Domestic same-store sales, or sales for stores open at least one year, increased 1 percent for the quarter.

Net income for the quarter increased $7.5 million, or 6.4 percent, over the same period last year to $123.3 million, while diluted earnings per share increased 21.2 percent to $2.46 per share from $2.03 per share in the year-ago quarter.

For the quarter, gross profit, as a percentage of sales, was 50 percent (versus 49.7 percent for last year’s quarter). The improvement in gross margin of 36 basis points was positively impacted by a favorable shrink expense comparison of 17 basis points, a shift in mix of sales to higher margin product, and lower product acquisition costs. Operating expenses, as a percentage of sales, were 34.7 percent (versus 34.9 percent last year). The reduction in operating expenses, as a percentage of sales, was a result of tighter expense management, partially offset by 25 basis points of expense from the continued investment in our hub store initiative. Additionally, operating expenses for the quarter were negatively impacted by higher pension expense (20 basis points), partially offset by a favorable credit card class action settlement (17 basis points).

Under its share repurchase program, AutoZone repurchased 565,000 shares of its common stock for $88 million during the second quarter, at an average price of $155 per share. The company has $517 million remaining under its current share repurchase authorization.

The company’s inventory increased 3.3 percent over the same period last year, driven by new store openings. Inventory per store was $504,000 versus $509,000 last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $26,000 from $50,000 last year.

"We are pleased to report our 14th consecutive quarter of double-digit EPS growth,” said Bill Rhodes, chairman, president and chief executive officer. “I would like to thank all AutoZoners for their commitment to delivering superior customer service, which we believe remains a competitive advantage. We continued our focus on improving parts coverage, hiring, retaining and training the best automotive parts professionals, and growing our commercial business. Additionally, we reported a 25.2 percent trailing four-quarter return on invested capital ratio this past quarter, as we remained committed to our disciplined approach of growing operating earnings while utilizing our capital effectively."

During the quarter ended Feb. 13, AutoZone opened 24 new stores in the U.S. and nine new stores in Mexico. As of Feb. 13, the company had 4,289 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 202 stores in Mexico.